Aquila, Vale coal dispute widens

Brazilian mining giant Vale has started legal action against Perth-based Aquila Resources after rejecting the Tony Poli-led iron ore and coal miner's valuation of the Belvedere coal project in Queensland.

The move comes after Vale agreed in June to acquire 24.5 per cent interest in the massive project from Aquila's estranged joint venture partner AMCI Holdings for $US92 million and invoked an option to buy out Aquila's matching share on equal terms.

But Aquila, which had previously flagged its desire to quit Belvedere to focus on its $5 billion West Pilbara iron ore project, immediately said it expected to get a better price for its share held though subsidiary BD Coal.

Under the terms of the Belvedere joint venture agreement, the stake must be priced at fair market value as determined by two valuers. If the two valuers cannot agree on a price within a 10 per cent range, a third valuer will be appointed and the price set according to the average of the three estimates.

Valuations were exchanged by the two parties in late August, but differed by more than 10 per cent, leading Aquila to seek the appointment of a third valuer as envisaged under the joint venture agreement.

However, it today said Vale had rejected such initiatives and had instead launched legal action in Queensland's Supreme Court on Friday to have the Aquila-commissioned valuation dismissed as failing to comply with the fair market value provisions of the joint venture agreement.

Vale is also seeking to have the fair market determination process deferred until the court rules on its application.

Aquila rejected Vale's assertions and said it would defend the proceedings "vigourously".

"BD Coal's preliminary view is that Vale Belvedere's assertions essentially constitute differences of professional opinion on matters of valuation," Aquila said.

"BD Coal is disappointed that time and money will be expended in hearing this matter in the Courts rather than following the process for the resolution of differences in the two valuations that the parties agreed when they entered into the JVA."

The Belvedere dispute comes while Aquila is also at loggerheads with Vale over the extent of work required to complete a definitive feasibility study for their jointly-owned Eagle Downs coal project in Queensland by the end of June.